For the first time in Europe, special bonds were sold, the money from which will go to the development of the defense industry. French bank BPCE SA put papers worth 750 million euros on the market, but investor demand exceeded 2.7 billion. This was reported by Bloomberg, writes UNN.
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The idea is that these bonds work not for eco-projects, but for defense enterprises.
The commitment to use the proceeds reflects the gigantic task facing Europe
Analysts say this indicates a radical change in the EU after the start of Russia's full-scale war against Ukraine. Previously, many funds avoided defense companies altogether, but now even investors with a "sustainable" approach are considering investing money.
I think we will see more such deals in the future, and banks will intervene to support the financing of Europe's defense ambitions
The high interest in the new papers is also confirmed by the market: demand was so significant that the conditions for buyers even slightly worsened – the bond spread decreased from initial expectations of 105–110 basis points to 85.
European countries are now actively increasing defense spending – in June, NATO members agreed to raise it to 5% of GDP. Against this background, shares of defense companies are rapidly growing and are among the top five leaders on the Euro Stoxx 600 exchange.
The French bank emphasizes that it has created a new model – the "European Defense Bond Label", which has been agreed with Euronext and other market participants. According to the rules, the bank must publish an annual report on the use of funds, verified by independent experts.
This means that BPCE has an unhindered chance to finance defense without any criticism. If you bought it, you don't have to worry about financing defense with its help